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The Hunt for Innovation: 10 Strategic Insights

It was initially diagnosed by Stanford psychologist Carol Dweck, who discovered that the broad power and authority held by CEOs often leads to risk-averse and even truth-averse culture in which employees offer up nothing but “the good news of their perfection and the company’s success, no matter what the warning signs may be.”

Determined to find a treatment for this deadly affliction—sometimes also known as “the peril of the fixed mindset”—The Economist Intelligence Unit earlier this year interviewed 226 senior executives in hopes of discovering why some companies are so good at innovation while others, in spite of the very best intentions, are hopelessly woeful at it. (Survey respondents work at companies across the globe and in a wide range of industries; more than half of the companies have revenue of more than $500 million.

The survey, sponsored by Oracle, generated a range of insights into how companies wittingly or otherwise stifle innovation via obstacles that can be cultural, organizational, hierarchical, or some combination of those.

The results indicated that tech-based products—as well as tech teams—can play vital roles in overcoming those obstacles. Disruptive technologies, including Big Data and also social—were found to be powerful antidotes to this innovation deficiency malady.

At the same time, however, executive-level risk-aversion about deploying new technologies frequently stifles the quest, the Economist research team concluded:

“Although respondents identified several technology trends as catalysts for innovation initiatives, perceptions about security risks linger over cloud computing and mobility. The concerns are common regardless of company size, industry or geographical location,” the study says.

But wait—it gets worse: “Only a handful of executives in our survey (15%) said they are not hindered in adopting any of these technology trends.”

Seems to me that right there we have—with deep apologies to Clayton Christensen for abusing his term—the innovator’s dilemma: most executives who say they want to pursue innovation won’t permit their teams to use some of the tools most capable of delivering innovation!

That short-sighted limitation aside, the study (you can see the full report here) offers a wealth of insights and ideas into how innovation can be nurtured more productively, and how the hunt for innovation can include a far bigger percentage of the company’s employee base.

In that context, I’ve extracted from the survey findings 10 insights for helping companies improve their efforts at identifying, nurturing, and generating innovation.

1.) Remember: Like Decline, the Lack of Innovation Is a Choice. Innovation-stifling siloes—cultural, psychological, financial, or organizational—are more likely to be found in large companies, the report says. But this isn’t a law of physics; it doesn’t have to be that way. Rather, big companies have to relentlessly fight the tendency toward innovation in isolation.

2.) IT to the Rescue! IT departments are “underutilized and could be more engaged in educating business leaders about new technology trends, enabling business units to adapt processes rapidly and identify pockets of innovation in the enterprise,” the report says.

3.) Customers *Must* Be Part of the Co-Creation Process. As companies of all sizes and across all industries realize that the co-creation of value and of experiences with customers can be a profound way to boost customer loyalty, they also must recognize that relevant innovation in a customer-free vacuum is impossible. Mid-size and smaller companies ($500 million or less) connect directly with customers in interviews about product design and testing, while companies with revenue above $1 billion or more likely to use social technology and sentiment analysis to uncover customer-focused innovations.

4.) HR Has to Solve the Analytical-Talent Shortage. While disruptive technologies such as Big Data was selected as the favored tool for developing new pricing models (60%), new products or services (38%), and improving business processes (38%), the “lack of analytical talent topped the list of concerns around Big Data.” No successful executive would sit by and let revenue languish and decline due to a lack of sales talent, so why on Earth are many companies not aggressively hammering away at this debilitating “lack of analytical talent”?

5.) The Title “Chief Innovation Officer” Can Be Dangerous. “I always resist the temptation of allowing myself to be called chief innovation officer, because it would send the wrong signal to the rest of the company,” says BT Group managing director Jean-Marc Frangos in the report. “Innovation is not something a special team does—it is something which must be ingrained in the mindsets and behaviors of everyone, and for which, ideally, there should be no special process.”

6.) It’s the Hierarchy, Stupid! When more and more employees are involved in the hunt for innovation, the likelihood of deeper engagements with customers goes up, the report says. At healthcare provider Kaiser Permanente, several “innovation centers” are responsible for improving the care of patients—and the ideas come from all levels of the organization, not just the leaders. “Nurses and even patients initiated and drove three of the healthcare provider’s more-successful projects,” the report says, including text-based reminders for patients; neon-colored uniforms to reduce errors and confusion; and portable clinics.

7.) If Leaders Aren’t Serious about Social, Then They’re Irresponsible. While it might seem painfully obvious that social media offer a great means of customer engagement, executives reported that “a lack of understanding” of social media’s benefits “remained a barrier to creating an innovation culture.” As in #1 above, the lack of innovation is a choice: if social media can help foster the types of deeper customer engagements that often trigger innovation, then executives must be responsible for dropping the Luddite act and becoming fluent with these game-changing tools. How bad is it? Accenture reports that “60% of their clients still consider themselves to be social-media novices,” the report says.

8.) Can Failure Help Foster Innovation? The absence of formal programs to analyze projects that didn’t work “means respondents’ companies invested time, money and other resources in a failed innovation effort without finding out what went wrong.”

9.) Can Innovation Be a Defined Process? At Lojas Renner, Brazil’s second-largest department-store chain, CIO and chief process officer Leandro Balbinot four years ago began collecting retail data as a means of predicting future demand. But he also believed the project could help spur innovation: Lojas Renner views innovation as “a defined process commonly used to achieve measureable objectives,” Balbinot says in the report. “The value of innovation comes from achieving new levels of results that would not be obtained through continuous improvement.” He offers a number of other valuable insights as well on the mildly counterintuitive notion of process-driven innovation.

10.) Small Can Be Big. “Empowering smaller teams to build their own tools to solve business problems helps to give rise to wider innovations,” the report says, citing a compelling involvement from Amazon CEO Jeff Bezos. In addition, instead of trying to boil the ocean, companies should encourage small, iterative projects that “set up an environment in which repeated experimentation and learning refine winning ideas.”

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